U.S. Retail Sales Stage Surprise Rebound

A key engine of the economy, U.S. retail sales rebounded unexpectedly in January, rising 1%, after six consecutive months of decline, the Commerce Department said on Feb. 12.

The seasonally adjusted data reported the sharpest monthly percentage gain in retail and food services sales since November 2007, the last month before the world's largest economy officially entered recession.

On a year-over-year basis, January retail sales fell 9.7% from January 2008. Over the November-January period, retail sales plunged 9.5% on an annual basis.

The surprise January rebound signaled a welcome glimmer of positive news on the US economy, in particular in the current context of falling prices: the department's data are not adjusted for price changes.

Rising retail sales were seen in a broad range of categories. Gasoline stations and electronics and appliance stores both notched up 2.6% sales gains from December. Dealer sales of autos and auto parts climbed 1.6%, clothing sales also rose 1.6% and grocery stores posted a 2.2% increase. Reflecting the prolonged housing crisis and the winter season, sales of building material and garden equipment stores had the sharpest decline, of 3.2%.Furniture and home furnishings store sales tumbled 1.3%.

Even excluding auto sales, which had dragged down the headline number for several months, retail sales rose 0.9% in January from the prior month, after plunging 3.2% in December.

In the 2008 fourth quarter, consumer spending plunged at an annual 3.5% rate, shaving 2.47 percentage points off gross domestic product (GDP), according to official data published in late January. Fourth-quarter GDP contracted at a 3.8% rate after a 0.5% shrinkage in the third quarter.